Trip Bonuses Turned Safety Net: Nib and Yango Rethink Insurance for Ride-Hailing

A tripartite agreement between Nib Bank, its independent offshoot Nib Insurance, and ride-hailing company Yango allows drivers to access insurance services with premiums settled through weekly trip bonuses. Drivers can make monthly premium payments themselves or have Yango settle the amount with the insurer based on their earned trip bonuses. Announced at Nib’s headquarters on Wednesday, the partnership also lays the groundwork for potential credit services set to be provided by the Bank for drivers.

Tewodros Mehari, Deputy Manager at G2g IT solutions (Yango’s partner in Ethiopia), says they want to minimize the trouble their drivers face when dealing with the fallout after an accident occurs. He indicated plans to introduce a courtesy car arrangement allowing drivers to access a vehicle if their own becomes immobilized in an accident.

“Car repair could take several months,” Tewodros told Shega.” We don’t want our drivers to lose their livelihood in the meantime.”

Courtesy car provisions are part of the insurance package offered by some companies primarily based in Europe. Tewodros also relayed Yango’s intentions to provide drivers with financial assistance equal to what they would earn had their car not been damaged.

While Yango’s drivers already earn bonuses based on their weekly trips, the new arrangement with Nib allows them to direct the funds for insurance purposes.  Drivers who make a minimum of five trips qualify for 400 birr, with the amount increasing up to 80 weekly trips. Annual premiums are expected to be between 20 and 30,000 birr by the deputy manager, while exact valuations will be made by Nib Insurance. This falls within industry rates, with most insurers charging around a minimum of 1.58% for ride-hailing vehicles.

Tewodros pointed out the collective bargaining power that their drivers have access to when dealing with financial institutions in the manner they did under the new arrangement.

Yango, which has been operational in Ethiopia since October 2023, competes for market share with incumbents like Ride and Feres, who account for most trips in Addis Ababa. However, despite the presence of digitally empowered ride-hailing companies since late 2017, insurance to either drivers or their vehicles is a recent phenomenon. While Zayride and Wez explored life insurance for their drivers, Little Ethiopia’s passenger and driver insurance service, launched last month, has been the most concrete advance.

Nonetheless, Ethiopia’s insurance industry remains nascent, with an extremely low penetration of less than one percent. Most of the industry’s market is also for motor and maritime insurance, which are legally requirements under Ethiopian law.